“Yes, this is a stake in the ground,” said Prue Willsford (pictured above), CEO of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF).
“It’s a step change,” said Willsford. “We have the vast bulk of GWP already committed to implementing this framework over the next couple of years and they can do that in a range of ways.”
Willsford was referring to, arguably, one of her biggest achievements during 10 years as CEO of the insurance industry peak body: a general insurance claims handling framework.
For the first time, Australia’s insurance industry has broadly agreed to a set of voluntary standards that indicate what claims handling competency looks like and that also provides that role with a career pathway.
The launch of the framework was one of the surprises at ANZIIF’s recent Insurance Industry Awards.
In the pleasant afterglow of the glamorous event, Willsford sat down with Insurance Business to discuss the reasons for the framework and how it came into being.
“There are a whole range of reasons why we need a framework,” said Willsford.
She referred to the “fantastic” General Insurance Code of Practice with its focus on setting expectations for customers dealing with insurance companies.
Willsford also mentioned last year’s major regulatory change impacting insurance companies. From 2022, for the first time, claims handling became a licensed service for companies – like insurers – holding an Australian Financial Services Licence (AFSL).
“So one of the requirements of the license is that the company attests to the fact that their people who are delivering their license services are competent, she said. “That’s a tricky thing when there’s no standard to determine what competent looks like because it becomes a circular argument.”
Willsford said that there are “a whole bunch of metrics” like quality assessments, complaints and caseloads that an insurance company can use to say its claims personnel are competent. However, with no comparative standard, she suggested it’s actually very hard to measure and judge what competency means.
“I’m not sitting here saying that the vast bulk of claims people are not competent but what there wasn’t, was an independent benchmark around, as I put it, simply, ‘what does good look like’,” said Willsford.
The claims handling framework, from a licensing perspective, she said, gives companies an independent benchmark that they can adapt to their circumstances and use to map their products and services, their job roles and their people.
“It’s a risk-based assessment and it enables them to document clearly what their version of good looks like against that independent benchmark,” said Willsford.
Willsford said ANZIIF came up with the idea partly as a result of working on the Professional Standards Framework for the life insurance industry. Those standards were introduced in 2021 with the collaboration and support of seven life insurance firms.
“That was a global first, an industry coming together in life insurance and setting a mandatory minimum standard for those companies that had signed up,” she said.
Towards the end of that project, the steering committee of life insurer CEOs suggested applying the same approach to claims and underwriting “and make it mandatory.”
Willsford said one big argument in favour of professional frameworks is they provide a career path.
“We know that the insurance industry struggles to attract talent and part of that is having a clear career pathway and knowing that there will be investment in you to grow your career,” she said.
Willsford said this “employee value proposition” is one reason the claims framework is a good idea. Another, is how this framework can build community trust in the industry.
“There’s no doubt that by professionalising claims by actually putting a stake in the ground and saying, ‘Our people are professionally trained’, that has the ability to increase confidence in the insurance industry, whether it be through regulators, government, or that broader community stakeholder group,” said Willsford.
She said, when the claims framework project got underway two years ago, ASIC was kept informed and was “delighted to see industry collaborating and setting its own standard.”
“So there’s the employee value proposition, there’s the customer and community value proposition, and yes, there is a regulatory value proposition as well,” she said.
Willsford suggested there was some industry opposition to the framework.
“We did have really constructive, and I do mean constructive, pushback throughout the process,” she said.
Willsford said some were concerned about another layer of standards requiring monitoring and management.
“But the reality is, you already have to monitor and manage it because you’ve got a license obligation,” she said. “I think once people really understood the benefits - in particular the employee value proposition, the customer value proposition and the regulator value proposition - they went, ‘Oh! That makes sense.’”
Willsford started developing the framework during the height of the COVID-19 pandemic with online roundtables. The fact that much of the industry was trapped at home was actually an advantage.
“There’s no doubt that if we had tried to do this as a series of face-to-face workshops, it would never have got done,” she said. “We had people from all over the country who could just pop into a workshop for an hour and a half, contribute, and get back to their day job.”
That included CEOs, group heads of claims and other very senior insurance executives. It was the start of 100s of meetings over the last couple of years, she said.
“Being able to get that number and depth and cross representation together - gold, absolute gold,” said Willsford. “Hard to do that, by the way, just so you know!”
IB asked Willsford if she thinks other insurance industry areas could have professional frameworks?
“Absolutely,” she said. “General insurance underwriting is also a candidate for having a professional standards framework,” she said. “I think there’s room in broking to set a standard higher than Tier 1,” said Willsford. “That would be fantastic.”
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